The Amer Company has the following characteristics: What is Amer's ROE?
A) 11.04%
B) 12.31%
C) 16.99%
D) 28.31%
E) 30.77%

Question

The Amer Company has the following characteristics:  What is Amer's ROE?
A) 11.04% 
B) 12.31% 
C) 16.99% 
D) 28.31% 
E) 30.77%

Quizplus · Accepted Answer

ROE (Return on Equity) = Net Income/Shareholders' Equity
From the given data, we can calculate:
Net Income = $610,000
Shareholders' Equity = $3,590,000 - $2,120,000 = $1,470,000
ROE = $610,000/$1,470,000 = 0.4164 = 16.99% 
Therefore, the best choice is C with an ROE of 16.99%.

The Amer Company Has the Following Characteristics: What Is